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Written by: Juliet Schooling Latter
04/03/2021
One of the good things about lockdown has been it’s given me more time to indulge in a passion of mine: reading. My latest choice is ‘Invisible Women’ by Caroline Criado Perez. The description is ‘exposing data bias in a world designed for men’. And I have to say, it is… revealing.

It focuses on the fact that the world around us has basically been designed by men, for men, because historically men have been in decision-making positions. And they see the world through their eyes, so make it work for them.

The other 50% of the population has to struggle to reach a top shelf set at a male height norm or slip and slide along a snow-covered icy pavement on the school run, while main roads are cleared for the ‘normal male’s commute’.

Even more worrying is the fact that car safety measures don’t account for women’s measurements and our symptoms for heart attacks are deemed ‘atypical’ and often go unnoticed.

As I said, it’s a fascinating read.

Gender inequalities in our finances

Gender inequalities are all around us and the impact can be significant. The world of finance is no different.

Did you know, for example, that thanks to the gender pay gap, women still earn almost a fifth less than men? £7,280 per year to be exact. And the lack of progress made in closing the gap means that at the current ‘pace’ we won’t have equal pay until the year 2277.

Not only do we earn less, but we are also likely to reach peak earnings earlier (at age 44 vs 55 for men), and if a woman decides to have children, there’s the ‘motherhood penalty’ to consider. A 2019 study by Third Way found that, on average, women lose 4% of hourly earnings for each child they have. But get this: men earn 6% more per child. This is known as the ‘fatherhood bonus’ – because fatherhood is “a valued characteristic of employers, signalling perhaps greater work commitment, stability, and deservingness.” And motherhood doesn’t?!

All this adds up over our lifetimes. An average woman working full-time in the UK could have a £41,000 gender pension gap at retirement. If you include part-time work in the equation, this gap widens to £72,500. And with a longer life expectancy than men, our smaller pot of money has to last even longer meaning women are 80% more likely to live in poverty after retirement than men.

Women: doing it for themselves

While none of us can wait more than 250 years for inequalities to vanish, there is some good news. While women may get paid less than men, we still save more… at least as a percentage of our income.

But we need to do more than save – we need to invest. What’s the point in putting money into a cash savings account at the moment when it’s paying next to nothing in terms of interest?

And women are actually good investors. A Barclays study last year of 2,800 Smart Investor customers, over a three-year period, showed that female investors actually achieved annual returns that were, on average, 1.8% higher than men.

Two steps to investing

There are two simple steps we can take to make our money work harder for us. The first is to invest earlier, the second is to invest more.

  1. Investing early

If you invest enough at an early age, you can close the gender pay gap yourself. For example, my first boss used to tell me to split my salary into thirds: one for savings, one for bills and one for fun. If you invest £550 a month from age 25, by the time you are 40 you could have a pot of money worth £150,000*. From this pot you could take 5% per annum in income (that extra £7,280).

  1. Investing more

If you invest more, you can also close the gap. Even an extra £100 a month can make a huge difference to your total investment over a number of years. A good way of increasing your savings over time is to make sure you increase the amount you invest by the same proportion as any pay rises you get – even if they are smaller than your male colleagues.

And if you are looking for ideas on where to invest your money, maybe consider an investment fund run by a woman?

There’s VT Downing Unique Opportunities, a newly launched fund investing in UK equities, which is run by Rosemary Banyard, for example. Or ASI UK Ethical Equity, run by Lesley Dunn, if you want to invest locally but with some ethical considerations.

Further afield, others I like are AXA Framlington Japan, managed by Chiasko Hardie, or M&G Emerging Markets Bond run by Claudia Calich. And finally, if you want there to be a world in 2277 when we finally get equal pay, maybe consider Ninety One Global Environment, whose manager Diedre Cooper is investing for a decarbonised planet.

*illustrative figures assume an annual return after charges of 5% and do not include inflation

Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. Juliet’s views are her own and do not constitute financial advice.

Juliet Schooling Latter is research director at FundCalibre

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